Rapti Commissions Agency & Ors. vs Union of India & Ors.

Rajiv Sharma, J.—All these writ petitions have been filed by three different petitioners and therein following identical reliefs have been claimed for, which are being quoted below:

"(a) Issue a writ of prohibition or writ, order or direction in the nature of prohibition, prohibiting the respondents to continue with the proceedings initiated under Section 14 of the Central Excise Act and not to summon the petitioners for appearance before them at Meerut or any place in furtherance of the said proceedings.

(b) Issue a writ of certiorari or a writ, order or direction in the nature of certiorari quashing the impugned proceedings initiated under Section 14 of the Central Excise Act and the consequent show cause notices and the summons issued in furtherance thereof.;

(c) Issue a writ of mandamus or a writ, order or direction in the nature of mandamus commanding the respondents to forthwith return the documents and other movable properties seized from the petitioners premises, both business and residential and not to conduct any further searches or seizures in purported exercise of powers conferred under the Central Excise Act or the Rules framed there under.

(d) Issue an appropriate writ, order or direction commanding the respondents to initiate proceedings under Section 22 of the Central Excise Act against all the officers of the Excise Department who have been instrumental and conducting searches and seizures in the petitioners'' residential and business premises for the past several years.

(e) Issue any other appropriate writ, order or direction which this Hon''ble Court may deem just and necessary in the circumstances of the case may also be passed and

(f) to allow the writ petition with costs.

As issues raised in all three writ petition are identical, request has come forward to treat writ petition No. 10128 (MB) of 2009 as the leading case and to decide all the three writ petitions together, on the arguments advanced in leading writ petition.

Brief background of the case as is reflected from the record are that M/s Arora Aromatics, 2 Km. Stone Moradabad Road Sambhal, District Moradabad, is engaged in manufacture of Menthol Crystal/Powder falling under Chapter subheading 30039021, Menthol Solution falling under Chapter subheading 29061100 and Dementholised (DMO), Pepper Mint Oil, Menthones, Terpine etc. falling under subheading No. 3301.25.90 of the Schedule to Central Excise Tariff Act, 1985, qua them allegations are that they have contravened provisions of Rules 2, 4, 7 and 10 of erstwhile CENVAT Credit Rules 2002 and Rules 3, 4, 9 & 12 of Cenvat Credit Rules 2004 and Rules 4, 6, 8, 10, 11 & 12 of the Central Excise Rule 2002 by fraudulently availing cenvat credit and utilizing the same for payment of duty on domestic clearances and export of goods on payment of duty and claiming the rebate on duty so paid. Based on an intelligence that M/s Arora Aromatics Sambhal is availing CENVAT credit on inputs, namely menthol Flakes and Dementholised Oil (DMO) on the basis of bogus Cenvat invoices issued by M/s Ruchi Infotech System, Lane No. 3B, Phase II SIDCO industrial Complex, Bari Brahmana, Jammu and M/s Arora Aromatics, Sambhal were utilizing the Cenvat Credit so availed towards payment of duty on their final products for domestic clearances as well as on export of goods under rebate claim and were thereafter claiming the rebate on duty so paid on the exported goods, investigations were initiated by the officers of Central Excise of Meerut, II (Commissionerate against the said M/s Arora Aromatics, Sambhal. Petitioner claims that they are only transporting goods for being used for manufacturing of other products hence they are not required to be registered under the provision of Excise Act the pre requisite term and condition being that the goods so manufactured are dutiable and excisable goods for issuance of summons entitling said credit facility. Petitioners have also give details of the fact that at premises of the petitioner on 03.04.2006 search was conducted and statement of Sri A.K. Goel was recorded. Thereafter on 03.05.2006 and 23.06.2006 summons were issued. Petitioner no. 3 was asked to give evidence. Petitioner has also contended and stated that Director General, Central Excise Intelligence, Sarabha Nagar Ludhina issued summons to petitioners no. 2 and 3 under Section 14 of the Act and in respect of inquiry which was on going against Jindal Drugs for evasion of central excise duty and therein petitioners appeared and nothing was found against them. Petitioners have been asked to appear by issuing summons on 17.07.2007 under Section 14 of the Act. Admittedly pursuant to the said summons appearance has not been put in. Thereafter again summons were issued on 24.07.2007 to appear in person on 06.08.2007 and pursuant to the same also petitioners did not appear, and requested for grant of time, which was accorded. Petitioners'' have stated that in respect of inquiry against M/s Ansar Chemical, they have appeared. Again show cause notice was given on 12.09.2007 to appear on 21.09.2008 in respect of inquiry pending for M/s Ansar Chemicals, to which petitioners claim to have submitted interim reply on 23.05.2009. In this background a team of Central Excise Meerut, Commissionerate made thorough investigation in the matter and after conducting the searches at various places, proceedings under Rule 26 of Central Excise Rules 2002 have been initiated and show cause notice was given to petitioner of writ petition No. 10128 (MB) of 2009, dated 28.11.2008 alongwith various others. To the said show cause notice, petitioner submits that he has already submitted his reply on 22.07.2009 and therein prayer has been made on behalf of the petitioner of writ petition No. 10128 (MB) of 2009 that show cause notice against the petitioner be discharged; no personal penalty proposed under Rule26 of Central Excise Rules be imposed; opportunity of personal hearing may kindly be granted for explaining the view points expressed and opportunity to crossexamine witnesses as requested in the reply be granted and fresh submission may be allowed to be submitted after such cross examination. In between the enquiry which had been ongoing revealed that major supplies of Mentha Oil to M/s Ruchi Infoteck systems, Jammu were M/s Rapti Commission, Agency and M/s Gupta supplied Co.; all located in Uttar Pradesh and in investigation made on 10.07.2009 by Investigating Officer, it has been found that most of the premises/offices of the aforesaid companies were closed/nonexistent/not maintaining any records. Petitioners have contended that time and again summons are received by them to appear, the summons dated 04.08.2009 and 14.08.2009 respectively has been received and petitioners claim that said proceedings are nothing but continuous harassment to them as petitioners are not at all engaged in the business of manufacturing of excise goods and have not availed any benefit of CENVAT credit, the impugned proceedings are without jurisdiction and same cannot be continued to harass and victimize and said proceedings are nothing but misuser of the statutory provisions. In this background as well as, as entire proceedings have been undertaken by the authority who has no authority to deal with the matter, writ of prohibition be issued and requisite relief claimed be allowed.

Submission to the similar effect has been advanced in other two writ petitions wherein notice under Section 14 of the Act have been issued to appear before the authority concerned on the same set of grounds.

Sri Prashant Chandra, Senior Advocate, assisted by Ms. Sharddha Agarwal, Advocate contended with vehemence that this Court should come to the rescue of the petitioners for the simple reason that entire proceedings undertaken under Section 14 of the Act by the authority namely Commissioner Central Excise, Meerut is totally without jurisdiction as he has no authority to direct the petitioners to appear before him, as petitioners'' do not fall in his territorial jurisdiction notified and as such proceedings in question are liable to be kept in abeyance and said authority be prohibited to proceed in the matter and further as petitioners have been meted with arbitrary treatment in the search and seizures as such requisite relief claimed for be accorded.

Countering said submission Sri K.D. Nag, learned counsel appearing for respondent Department contended that in the present case proceedings undertaken under Section 14 of the Act are nothing but investigation and petitioners have been called for to appear and cooperate in on going investigation and to state truth and further as genesis of the inquiry in question has started from Sambhal District Moradabad, Commissionerate Central Excise, Meerut has got full authority to deal with the matter and further in the present case truth is required to come out after investigation and on there being substantial reasons to believe, search has been conducted and relevant documents have been taken into custody and as yet investigation is on going wherein petitioners are not cooperating as such documents in question cannot be returned and action under Section 22 of the Act, against the said Officers concerned cannot be taken, as such writ petition is liable to be dismissed.

To test the veracity of the arguments advanced in respect of jurisdiction of opposite party no. 3 Notification which has been relied upon being Notification No. 66/2001C.E.(N.T.) dated 13.11.2001 issued by Central Board of Excise and Customs in respect of jurisdiction of the Commissioner of the Central Excise is being quoted below:

"56 MeerutII In the district of Modadabad, tehsil Dhampur Nazibabad Kiratpur, Seohara and Bundki of District Bijnore and tehsil of Hapur and Garhmukteshwar of district Ghaziabad, district Jyotiba Phule Nagar, Rampur, Bareilly, Badaun and Pilibhit of the State of Uttar Pradesh and district of Udhamsingh nagar Pithoragarh, Champavat, Nainital Bageshwar, Almore and Chamoli of the State of Uttaranchal."

At this juncture Section 14 of the Central Excise Act, 1944 is being looked into.

"Section 14 Power to summon persons to give evidence and produce documents in inquiries under this Act (1) Any Central Excise Officer duly empowered by the Central Government in this behalf shall have power to summon any person whose attendance he considers necessary either to give evidence or to produce a document or any other thing in any inquiry which such officer is making for any of the purpose of this Act. A summons to produce documents or other things may be for the production of certain specified documents or things or for the production of all documents or things of a certain description in the possession or under the control of the person summoned.

(2) All persons so summoned shall be bound to attend, either in person or by an authorised agent, as such officer may direct; and all persons so summoned shall be bound to state the truth upon any subject respecting which they are examined or make statements and to produce such documents and other things as may be required:

Provided that the exemptions under Section 132 and 133 of the Code of Civil Procedure, 1908 (5 of 1908) shall be applicable to requisitions to attendance under this section.

(3) Every such inquiry as aforesaid shall be deemed to be a "judicial proceedings" within the meaning of Section 193 and Section 228 of the Indian Penal Code, 1860 (45 of 1860)."

A bare perusal of the aforesaid provision would go to show that said Section falls within Chapter IIA which deals with indicating amount of duty in the price of goods etc. for purpose of refund and crediting certain amount of the fund. Under the aforesaid Section, it has been provided that any Central Excise Officer duly empowered by the Central Government in this behalf shall have power to summon any person whose attendance he considers necessary either to give evidence or to produce a document or any other thing in any inquiry which such officer is making for any of the purpose of this Act. Summons to produce documents or other things may be for the production of certain specified documents or things or for the production of all documents or things of a certain description in the possession or under the control of the person summoned. Under SubSection (2) of Section 14 of the aforesaid Act there is no escape route provided to persons who have been summoned as he is bound to attend, either in person or by an authorized agent, on the direction given by such Officer for making investigation and inquiry and further there is obligation cast upon the person to state truth upon any subject respecting which they are examined or make statements and to produce such documents and other things as may be required. A proviso has also been added to the said provision which extend the benefit of exemptions under Section 132 and 133 of the Code of Civil Procedure, 1908. SubSection (3) of Section 14 of the Act clarifies such inquiries to be deemed to be a judicial proceedings within the meaning of Section 193 and Section 228 of the Indian Penal Code, 1860 which is reiteration of the anything but earlier part of this provision which provides that person so summoned to state truth is bound to state truth.

This particular provision is clear that any Central Excise Officer empowered by the Central Government in this behalf has power to summon any person whose attendance he considers necessary either to give evidence or to produce a document or any other thing in any inquiry which such officer is making for any of the purpose of this Act.

Admitted position is that inquiry in the present case has been initiated by a team of Central Excise, Officers of Meerut qua factory of M/s Arora Aromatics, Sambhal, Moradabad. Commissioner, Central Excise has got full authority and jurisdiction to make inquiry in respect of District Moradabad as per the notification, on which reliance has been placed by the petitioners. Once inquiry commenced at District Moradabad, has been initiated, then Commissioner Central Excise, at Meerut has got full authority to summon any person in evidence, whether he is situated in his territorial jurisdiction or not. Said authority of inquiry has been conferred in reference to the place of inquiry from where inquiry emanated. Here admitted position is that inquiry in question has commenced or investigation at district Moradabad, when the factory of M/s Arora Aromatics Sambhal at Moradabad availing cenvat credit has been raided upon, in this background any one whose attendance is necessary in the wisdom of Commissioner of the Central Excise was liable to be summoned and persons who are summoned are duty bound to attend as per direction given by Officer concerned and such persons are further duty bound to state truth and proceeding being judicial proceeding element of seriousness has been attached to the same. Thus, the Commissioner Central Excise, Meerut has got full authority and jurisdiction to summon the petitioners for cooperating in the inquiry as said inquiry is on going.

From the side of petitioners reliance has been placed on the judgments of Calcutta High Court, Union of India Vs. Kumar Trading Co. 2000 (121)ELT 18 (Cal) and Hon''ble Apex Court in the case of Siemens Ltd. Vs. State of Maharashtra and others reported (2006)12 SCC 33 by contending that exercise which is on going same is nothing but misuse of proceeding, as such even at the stage of issuance of show cause notice same can be interfered with in the facts of present case. In the case case of Union of India Vs. Kumar Trading( Supra) the goods were covered by Indo Nepal Transit treaty, as such section 111 (o) of the Customs Act was not attracted, consequently there was no occasion to issue any show cause notice, in this background proceedings were held to be without jurisdiction. In the case of Siemens Ltd. (Supra), therein the question was as to whether jurisdictional fact existed for issuance of said notice, in the background, when impugned order, as well as statement made clearly reflected that mind qua liability had already been made, and quantification was the issue left which was then not in the realm of show cause notice.

Adjudication cannot be compared with investigation. In the present case investigation has been on going against M/s Arora Aromatics under Central Excise Act and pursuant there to notice has been issued dated 28.11.2008 to which petitioner has submitted his interim reply on 22.07.2009. In between additional facts have come to light, in the inquiry that major supplies of Mentha Oil are from Uttar Pradesh, from petitioners no. 1, 2 and 3 being there, in this background on most of known premises of petitioners'' searches have been carried out on 10.07.2009 and during the said enquiries it has been found that most of the premises are closed/not existing/not maintaining any records, in this direction notices have been issued to appear for evidence, alongwith documents described in the schedule. Once investigation is on and notices has been issued under Section 14 of the Act to the petitioner to cooperate in the investigation then summons which have been issued as understood in legal parlance, is an intimation requiring a person to whom it is issued to appear to give evidence and to produce some documents etc. It is not an order in the sense that it decides any question or communicates a decision taken. It merely intimates the person concerned that he is required to appear before the named authority for giving evidence and to produce a document etc. Issuance of summons normally follows an order for such issuance by the authority concerned but that order is not a consequence of any determination of a question at issue not is it in execution of any such determination. Said view has been taken by the Division Bench of this Court in the case of Hindustan Safety Glass Works Ltd. Vs. Assistant Collector, 1985 (21) ELT 38 .

Once this is factual position and no liability has been fastened in the process of on going investigation and the incumbent has been asked to appear so that investigation/inquiry may further proceed then by no stretch of imagination it can be said that authority under Section 14 of the Central Excise Act is being misused whereas said authority is being exercised for the purposes for which it has been created and conferred on the Authority concerned.

Facts of the case clearly reflect that in leading writ petition interim reply to the said show cause notice dated 28.11.2008 has been given on 22.07.2009 and before that on one pretext or other summons under Section 14 of the Act have not been honoured in respect of enquiry of M/s Arora Aromatics and before that in enquiry fresh material has come on 10.07.2009, for which notices under Section 14 of the Act have been issued on 04.08.2009 and 14.08.2009 respectively. Inquiry which is being undertaken is to be brought to its logical end and in order to facilitate conclusion of said inquiry once action is being taken under Section 14 of the Act then qua the same no fault can be found.

Based on the judgment in the case of Thirumala Tirupati Devasthanams and another Vs. Thallappaka Ananthacharyulu and others reported in (2003) 8 SCC 134 specially paragraph 14 it has been prayed that a writ of prohibition be issued. Facts of the said case are clearly distinguishable, as far as proposition of law is concerned qua the law laid down therein, there is no dispute and doubt of the fact, that Hon''ble Apex Court and High Court has authority to issue writ of prohibition and this is also settled view that a writ of prohibition must be issued only in rarest of rare cases and it is only when (a) proceeds to act without or in excess of jurisdiction (b) proceeds to act in violation of the rules of natural justice, (c) proceeds to act under law which is itself ultra vires or unconstitutional or (d) proceeds to act in contravention of fundamental rights. The principles, which govern the exercise of such power must be strictly observed.

Here none of these contingency which has been described are in existence as action which is being taken by the authority concerned is well within its competence and jurisdiction in the facts of the case, as such as far as proceedings under Section 14 of the Central Excise Act undertaken by Commissioner Central Excise is concerned same suffers from no illegality whatsoever. Writ of prohibition cannot be issued to authority to prevent the authority from performing its lawful function in lawful manner.

Much emphasis has also been laid on the facts that petitioners neither deal in excisble good nor they do fall in the definition of manufacturer, as such proceedings qua them is unsustainable. In this direction reliance has been placed by the petitioners on the judgment of South Bihar Sugar Mill Ltd. (J.336); Union of India Vs. Delhi Cl.th and General Mills 1977 ELT(J.399). In the present case, the issue sought to be raised is not at applicable or attracted for the simple reason that here under the provisions of Central Excise Act, fraudulent cenvat facility has already been obtained and same has been unauthorisedly utilized for payment of duty on domestic clearances and export of goods on payment of duty and claiming rebate of duty so paid by M/s Arora Aromatics, and in the said direction investigation is on wherein petitioners are to cooperate.

Now coming to the request which has been made in respect of return of the documents and immovable property seized from the petitioners'' and to initiate proceedings under Section 22 of the Central Excise Act against all the officers of the Excise Department. Said request of the petitioners cannot be accorded for the simple reason that investigation is still on and has not yet been concluded. Consequently in the facts of the present case there is no scope of interference with the same.

Consequently, all these three writ petitions lack substance and are dismissed accordingly.

No orders as to cost.